Alessandro Pozzi: Hi there. Thank you for taking my questions and congratulations on the good sets of results. My first question is on the average selling price. As you pointed out, there are different categories that are seeing different movement in prices. And if I look at your average selling price in Q3, it’s not that different from Q4 in 2022, marginally down, but not as much as the Pipe Logix. So the question here is, is there a growing disconnect between your ASP and the Pipe Logix, or is it just a matter of the time lag between the two and we will see your ASP actually falling in line with the Pipe Logix maybe in the coming quarters? And on this point, maybe if you can give us some color on where you see sales going in Q4 and in Q1 with the EBITDA margin?
That’s the first question. The second question is on the share buyback. Maybe if you can clarify when you’re planning to start the share buyback and whether maybe Techint is going to participate or when we will know whether Techint is going to participate. Thank you.
Paolo Rocca: Thank you, Alessandro. As far as your first question is concerned, the association between the Pipe Logix indicator and our overall price is influenced by many different factors. On one side, the majority of our prices are driven by different factors compared to the Pipe Logix. Some of the formulas are taking into consideration costs or different variables independent from the Pipe Logix. Even within the US and North America that is more influenced by Pipe Logix, the formula we have with our client are reflecting specific products within the Pipe Logix portfolio that in some cases are not moving in the same direction as the average of Pipe Logix. There are differences between, for instance, premium or complex products and more simple products.
So I don’t think we can derive a strict correlation between the pipe line and the overall average price of Tenaris. Yes, we have a more strict correlation with our operation in North America, but North America is very important in our overall sales. So I will ask Luca Zanotti to add some color on this relation between the Pipe Logix index and the dynamics of our prices.
Luca Zanotti: Yes, thank you, Paolo. Good morning, Alessandro. As Paolo was saying, when we look at the North America and we look how the demand is structured, you see that always more and more we have a predominance of seamless heat treated. If you look at, for example, a key component of the demand, which is the production casing, which is more or less 40%, 45% of the total market, the great majority of this is seamless. When we cope this with the structure of the Pipe Logix and the price, you see that these items are the ones that suffer less of the decrease within the Pipe Logix. So for you to come up with a conclusion, you should put together the structure of the market and the way the different items are moving within the Pipe Logix.
And this is one point that is worth mentioning. The second point that is worth mentioning is that when you look at the United States, our formula with our customers are not necessarily 100% related to the Pipe Logix. We have other indicators and obviously these indicators in this context are much less volatile than the Pipe Logix itself. I believe that these are the two main reasons why you see a sort of not perfect match between our prices, even in the United States, when you look at the Pipe Logix.
Paolo Rocca: Then, Gabriel, you can comment on the wide range of prices and the dynamic that is very different that we have in many other markets of our system.
Gabriel Podskubka: Yes, Paolo, thank you very much and good morning, Alessandro. Indeed, the dynamics of the prices in international markets differ from the dynamics of the Pipe Logix. Internationally, we are benefiting from an increased demand on Middle East and offshore markets, and we have at the same time a tight supply of premium products, sophisticated grades, sour service, or high chromium grades as well. So, these segments are not linked or influenced by no means by the Pipe Logix. The products required, the competitive environment completely differs from that influenced by Pipe Logix. So, in international markets, we continue to see in the high end of the market opportunities to enrich our mix and drive prices up. There is typically a lag of six months to nine months in this part of the world from booking prices and into deliveries, but we see a positive trajectory on the international pricing into the end of this year and into 2024.
Paolo Rocca: Thank you, Gabriel. And on the second question, which is the share buyback, the share buyback will be executed in quarterly tranche from now until within one year, and we didn’t receive any specific information on this from our majority shareholder.
Alessandro Pozzi: Okay, thank you. And just to follow up on the evolution of margins for the next couple of quarters, is there any additional color that you can provide?
Paolo Rocca: Well, to the extent to which the Pipe Logix is influencing, at least as Luca was explaining, part of our sale in North America and in some cases also other markets, we will see this reflected in our margin with some delay. So, the decline that you have seen in this quarter will also be reflected in the next and possibly according to the evolution of Pipe Logix in the coming months, November and December. We will see if this trend will continue or not. To this extent, this will be reflected in our margin. As you have seen, last quarter we anticipated the margin in the range of 30%. This is where we are today. Considering all the factors, I think that we can have slightly lower margin in next quarter, but we will remain, let’s say, between 25% and 30% over time. This is also our long-term view.
Alessandro Pozzi: Okay, and potentially picking up from Q2 if Pipe Logix stabilizes. Is that fair?
Paolo Rocca: Difficult to predict. There are many factors that will be influencing demand and supply in, let’s say, during the first half of 2024. There is activity that is important, the level of drilling, the demand of pipe, the level of import is also relevant, imports went down, but we have to see if this is a trend that will continue. In general, we perceive a reduction in the level of inventory in the market, which is positive for giving support to the overall price level in the US.
Alessandro Pozzi: Thank you very much for the color. I’ll turn it back. Thank you.
Operator: Thank you. One moment for our next question, please. And it comes from the line of Arun Jayaram with JPMorgan Securities.
